What is Social Value? And How Can I Measure It?

Here at Thrive, we help businesses demonstrate the extensive social value they create. Whether large or small, and irrespective of industry type, it’s astonishing the hidden impact many businesses are having. Our tools help them show both stakeholders, the community and bid assessors how exactly they are contributing to society through the work that they do.

But what exactly IS social value and how can you measure it?

According to Social Value UK, one of the most recognised professional bodies for social value, it is the

quantification of the relative importance that people place on the changes they experience in their lives.

For example, a new library is built in a town that previously didn’t have one. Paid for by the local council, they are able to look at the value the new resource brings to people’s lives. They can assess the effect on society when more people have access to literature and reference materials. Or they can look at the positive impact of giving young people a place to go to learn. They can consider the benefits to mental health that providing a space for lectures and talks has delivered. There may even be an assessment of the new employment opportunities that this new facility can now provide. All of these are social benefits which did not exist before the library was built.

But more than that, all the contractors used in the construction of the library – from the builders to the telecommunications providers  – can also demonstrate social value from their work. Perhaps they have been able to give apprenticeships to local people. These people may even have been out of work previously. Perhaps they have used green technologies such as solar panels, cutting the carbon emissions of the town by a good percentage.

Often considered the mainstay of charities and churches, we now see there is a huge opportunity for commercial organisations to both provide and demonstrate social value. The growing movement to account for these values seeks to change the way people think about it. Social value goes far beyond engaging in an employee volunteering scheme or some theatrical show of presenting a comically sized cheque to a good cause. We need to look at a long-term strategy. How do our practices get people off the streets? Can we return more unemployed people to work? How can we improve the safety of our communities? Can we protect the mental health of our young people? What strategies can we have to foster these long-term needs without compromising on the delivery of our main business? How can we integrate these outcomes into the values and mission of our business?

 

In terms of the commercial world, the idea of assessing social value is relatively new.

It was only in 2013 that The Public Services (Social Value) Act encouraged people who commission public services to think about how they can also secure wider social, economic and environmental benefits. Designed as a ‘tool to help commissioners get more value for money out of procurement’ it comes across more as a cost saving exercise than a mandate to look at overall societal benefits.

The government did try. They introduced the Social Value Awards in 2016 and created a collection of resources available for anyone trying to negotiate the tricky path to including social value in their business. But navigating your way through Public Procurement Notes (PPNs) and white papers was not made easy. A review of the Act in 2016 admitted that it was ‘having a positive effect where it is taken up, and that it has clear potential to act as a tool for smarter procurement given the right application’ – but potential doesn’t equate to progress and there were too many loopholes or circumstances where the act didn’t need to be applied for this to be a game changer.

Still many organisations used this to improve their practice. Forward thinking Tier 1 constructors like Kier chose to imbed this strategy into their mission well before it became the norm. “Kier is committed to preventing environmental and social harm, as well as replenishing our natural systems and renewable resources and having a positive impact on the communities and environments in which we operate” states Kier Group Chief Executive Andrew Davies.

However, while still a ‘nice to have’, plenty of bid assessors were making decisions based on lowest cost. Thankfully in 2020 we had the introduction of PPN 06/20 – in the most basic terms, PPN 06/20 says that Central Government Departments, their Executive Agencies and Non Departmental Public Bodies must give 10% weighting to social value in all tenders. Now it is mandatory there is more of a need to really understand what social value is and how you can really get behind the outcomes.

But how do you measure social value?

Good question. There are many different ways of appraising or measuring social value but, for simplicity’s sake, we’ll use a common method here.

How do you measure the increased benefit one gets from living beside a park or from having improved street lighting? These once abstract ideas do, in fact, have a more technical side to them. A bid assessor – or indeed the general public – wants to know the financial value attributed to your activities. So there needs to be a way to assess this.

So let’s think of it this way. ‘If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community.’ (Social Enterprise UK)

As part of PPN 06/20 the government created the Social Value Model which outlines the key objectives that contractors need to be thinking about, centred around the topics that are key in today’s world. But PPN 06/20 and the Social Value Model related to it do not include a methodology to turn raw metric information into financial numbers. Many organisations commissioning public projects want to understand a financial value for social value, alongside the metric commitments.

You need something to say “If I do this, it will produce £X in terms of social value?” But each company cannot be expected to work those values out themselves. There needs to be a benchmark, some form of aggregated model or framework to be accountable to and measure your activity against. That is why Thrive’s software has a built-in set of ‘proxy values’ to help businesses who also want to financially value the social impact they are creating. Putting a value to social impact is a broader, and very important topic which we will cover more deeply in subsequent posts in this social value series.

Want to know more? Read How to Win More Business by Demonstrating your Social Value in Tenders